DoT's test checks on telcos AGR dues standard audit procedure: COAI

Terming 'test checks' proposed by the government on telcos' AGR arithmetic as standard audit procedure, Industry body COAI has said the DoT needs to ensure consistency among its different circles on calculation of dues to minimise any differences.

Cellular Operators' Association of India (COAI) also cautioned that any decision to encash bank guarantees will be "disastrous" for the telecom industry, which only has three private players.

"Any move to encash bank guarantees will precipitate an already precarious situation," COAI Director General, Rajan Mathews told PTI.

Mathews termed the 'test checks' being proposed by the telecom department to examine deviation in calculation of dues by companies as a "standard audit procedure".

He pointed out that while amounts need to be finalised as soon as possible, operators too should be given a fair opportunity to explain the deviations in calculation.

"There should be consistency amongst all LSAs (Licensed Service Areas) of the DoT (Department of Telecommunications) on how the amounts are calculated, so the differences are minimised," Mathews added.

The government has made it clear that it will verify the companies' claims on AGR math and examine any deviations from its own calculation, through random 'test checks' before March 17.

The government will conduct 'test check' for any one year (of telcos' dues) to examine variances between telecom companies' assessment and the government's own calculation of AGR liabilities.

The test check will happen for all telecom firms, but could start with those, which have already claimed they have made full and final settlement towards their statutory liabilities, like Tata Teleservices.

In all, as many as 15 entities owe the government Rs 1.47 lakh crore -- Rs 92,642 crore in unpaid licence fee and another Rs 55,054 crore in outstanding spectrum usage charges.

These dues arose after the Supreme Court, in October last year, upheld the government's position on including revenue from non-core businesses in calculating the annual adjusted gross revenue (AGR) of telecom companies, a share of which is paid as licence and spectrum fee to the exchequer.

The Supreme Court earlier this month rejected a plea by mobile carriers such as Bharti Airtel and Vodafone Idea Ltd for extension in the payment schedule and asked them to deposit an estimated Rs 1.47 lakh crore in past dues for spectrum and licences.

The apex court had warned that it will initiate contempt proceedings against top executives of these firms for non-payment.

Some telecom firms are already struggling with mounting losses and debt, and the additional liability has raised concerns of them defaulting on existing loans.

Of the estimated dues that include interest and penalty for late payments, Airtel and Vodafone Idea owe about 60 per cent.

Vodafone Idea is confronted with total AGR dues of over Rs 53,000 crore. Of this, it has so far paid only Rs 3,500 crore in two tranches earlier this week.

Airtel has so far paid Rs 10,000 crore out of its estimated liability of over Rs 35,000 crore.

Tata Teleservices has paid Rs 2,197 crore, the entire outstanding it believes to have arisen after the October ruling of the apex court for calculating dues.

Tata Teleservices and Tata Teleservices Maharashtra have submitted to the government the details of calculation in support of its payment, but sources in the DoT said that wide gap between the company's calculations and the department's assessment of about Rs 14,000 crore, will certainly be examined.